THE NATIONAL COMPANY LIMITED (ACQUISITION AND TRANSFER OF 
UNDERTAKINGS) ACT, 1980 
_________ 

ARRANGEMENT OF SECTIONS 
  __________ 

CHAPTER I 
PRELIMINARY 

SECTIONS 

1.  Short title and commencement. 
2.  Definitions. 

CHAPTER II 
ACQUISITION AND TRANSFER OF THE UNDERTAKINGS OF THE COMPANY 

3.  Transfer to, and vesting in, the Central Government of the undertakings of the Company. 
4.  General effect of vesting. 
5.  Power of Central Government to direct vesting of the undertakings of the Company in an existing 

Government company. 

6.  Transfer  of  undertakings  of  the  Company  from  an  existing  Government  company  to  a  new 

Government company. 

7.  Company to be liable for certain prior liabilities. 

CHAPTER III 
PAYMENT OF AMOUNTS 

8.  Payment of amount. 
9.  Payment of further amount. 

CHAPTER IV 
MANAGEMENT, ETC., OF THE UNDERTAKINGS OF THE COMPANY 

10.  Management, etc., of the undertakings of the Company. 
11.  Duty  of  persons  in  charge  of  management  of  the  undertakings  of  the  Company  to  deliver  all 

assets, etc. 

12.  Duty of persons to account for assets, etc., in their possession. 

CHAPTER V 
PROVISIONS RELATING TO THE EMPLOYEES OF THE COMPANY 

13.  Continuance of employees. 
14.  Provident fund and other funds. 

CHAPTER VI 
COMMISSIONER OF PAYMENTS 

15.  Appointment of Commissioner of Payments. 
16.  Payment by the Central Government to the Commissioner. 
17.  Certain powers of the Central Government or Government company. 
18.  Claims to be made to the Commissioner. 
19.  Priority of claims. 
20.  Examination of claims. 
21.  Admission or rejection of claims. 
22.  Disbursement of money by the Commissioner. 
23.  Disbursement of amounts to the Company. 
24.  Undisbursed or unclaimed amount to be deposited with the general revenue account. 

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CHAPTER VII 
MISCELLANEOUS 

25.  Act to have overriding effect. 
26.  Assumption of liability. 
27.  Management to continue to vest in the Custodian until alternative arrangements have been made. 
28.  Contracts to cease to have effect unless ratified by the Central Government or the Government 

company. 
29.  Penalties. 
30.  Offences by companies. 
31.  Protection of action taken in good faith. 
32.  Delegation of powers. 
33.  Power to make rules. 
34.  Power to remove difficulties. 
35.  Repeal and saving. 
THE SCHEDULE. 

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THE NATIONAL COMPANY LIMITED (ACQUISITION AND TRANSFER                                                

OF UNDERTAKINGS) ACT, 1980 

ACT NO. 42 OF 1980 

[19th July, 1980.] 

An  Act  to  provide  for  the  acquisition  and  transfer  of  the  undertakings  of  Messrs.  National 
Company Limited with a view to securing the proper management of such undertakings so as 
to  subserve  the  interests  of  the  general  public  by  ensuring  the  continued  manufacture, 
production and distribution of articles made of jute, which are essential to  the needs of the 
economy of the country and for matters connected therewith or incidental thereto. 

WHEREAS  Messrs.  National  Company  Limited  had  been  engaged  in  the  manufacture  and          

production  of  articles  mentioned  in  the  First  Schedule  to  the  Industries  (Development  and  Regulation) 
Act, 1951 (65 of 1951), namely, textiles made wholly or in part of jute; 

AND WHEREAS the management of the undertakings of Messrs. National Company Limited was taken 
over  by  the  Central  Government  under  section  18AA  of  the  Industries  (Development  and  Regulation) 
Act, 1951 (65 of 1951); 

AND  WHEREAS it is necessary to acquire the undertakings of Messrs. National Company Limited to 
ensure that the interests of the general public are served by the continuance, by the undertakings of the 
Company, of the manufacture, production and distribution of the aforesaid articles, which are essential to 
the needs of the economy of the country; 

BE it enacted by Parliament in the Thirty-first Year of the Republic of India as follows:— 

CHAPTER I 

PRELIMINARY 

1.  Short  title  and  commencement.—(1)  This  Act  may  be  called  the  National  Company  Limited 

(Acquisition and Transfer of Undertakings) Act, 1980. 

(2) The provisions of sections 29 and 30 shall come into force at once and the remaining provisions of 

this Act shall be deemed to have come into force on the 27th day of April, 1980. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “appointed day” means the 27th day of April, 1980; 

(b) “Commissioner” means the Commissioner of Payments appointed under section 15; 

(c)  “Company”  means  Messrs.  National  Company  Limited,  a  company  within  the  meaning         

of  the  Companies  Act,  1956  (1  of  1956),  and  having  its  registered  office  at  18A-Brabourne  Road, 
Calcutta-700001, in the State of West Bengal; 

(d)  “existing  Government  company”  means  a  Government  company  which  is  carrying  on 

business on the appointed day; 

(e) “new Government company” means a Government company formed and registered on or after 

the appointed day; 

(f) “notification” means a notification published in the Official Gazette; 

(g) “prescribed” means prescribed by rules made under this Act; 

(h)  “specified  date”,  in  relation  to  any  provision  of  this  Act,  means  such  date  as  the  Central 
Government may, by notification, specify for the purposes of that provision and different dates may 
be specified for different provisions of this Act; 

(i)  words  and  expressions  used  herein  and  not  defined  but  defined  in  the  Companies                 

Act, 1956 (1 of 1956), have the meanings respectively assigned to them in that Act. 

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ACQUISITION AND TRANSFER OF THE UNDERTAKINGS OF THE COMPANY 

CHAPTER II 

3.  Transfer  to,  and  vesting  in,  the  Central  Government  of  the  undertakings  of  the           

Company.—On the appointed day, the undertakings of the Company, and the right, title and interest of 
the Company in relation to its undertakings, shall, by virtue of this Act, stand transferred to, and vest in, 
the Central Government. 

4. General effect of vesting.—(1) The undertakings of the Company shall be deemed to include all 
assets, rights, lease-holds, powers, authorities and privileges, and all property, movable and immovable, 
including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash 
on hand, reserve funds, investments, book debts and all other rights and interests in, or arising out of, such 
property as were immediately before the appointed day in the ownership, possession, power or control of 
the Company, whether within or outside India, and all books of account, registers and other documents of 
whatever nature relating thereto. 

(2) All properties as aforesaid which have vested in the Central Government under section 3, shall, by 
force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all 
other incumbrances affecting them, and any attachment, injunction, decree or order of any Court or other 
authority restricting the use of such properties in any manner or appointing any receiver in respect of the 
whole or any part of such properties shall be deemed to have been withdrawn. 

(3) Every mortgagee of any property which has vested under this Act in the Central Government and 
every person holding any charge, lien or other interest in, or in relation to, any such property shall give, 
within such time and in such manner as may be prescribed, an intimation to the Commissioner of such 
mortgage, charge, lien or other interest. 

(4) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in 
sub-section (3) or any other person holding any charge, lien or other interest in, or in relation to, any such 
property shall be entitled to claim, in accordance with his rights and interests, payment of the mortgage 
money or other dues, in whole or in part, out of the amounts specified in section 8 and also out of the 
amounts  determined  under  section  9,  but  no  such  mortgage,  charge,  lien  or  other  interest  shall  be 
enforceable against any property which has vested in the Central Government. 

(5) Any licence or other instrument granted to the Company in relation to any undertaking which has 
vested  in  the  Central  Government  under  section  3  at  any  time  before  the  appointed  day  and  in  force 
immediately before the appointed day shall continue to be in force on and after such day in accordance 
with its tenor in relation to and for the purposes of such undertaking, and on and from the date of vesting 
of such undertaking, under section 5, in an existing Government company, or under section 6, in a new 
Government company, the existing, or new, Government company, as the case may be, shall be deemed 
to  be  substituted  in  such  licence  or  other  instrument  as  if  such  licence  or  other  instrument  had  been 
granted to such existing, or new, Government company and such existing, or new, Government company 
shall hold it for the remainder of the period for which the Company would have held it under the terms 
thereof. 

(6) If, on the appointed day, any suit, appeal or other proceeding, of whatever nature, in relation to 
any property which has vested in the Central Government under  section 3, instituted or preferred by or 
against  the  Company,  is  pending,  the  same  shall  not  abate,  be  discontinued  or  be,  in  any  way, 
prejudicially  affected  by  reason  of  the  transfer  of  the  undertakings  of  the  Company,  or  of  anything 
contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted or enforced 
by  or  against  the  Central  Government,  or  where  the  undertakings  of  the  Company  are  directed  under 
section 5, to vest in an existing Government company or become transferred by virtue of the provisions of 
section 6 to a new Government company, by or against such Government company. 

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5.  Power  of  Central  Government  to  direct  vesting  of  the  undertakings  of  the  Company  in  an 
existing  Government  company.—(1)  Notwithstanding  anything  contained  in  sections  3  and  4,  and 
subject  to  the  provisions  of  section  6,  the  Central  Government  may,  if  it  is  satisfied  that  an  existing 
Government  company  is  willing  to  comply,  or  has  complied,  with  such  terms  and  conditions  as  that 
Government may think fit to impose, direct, by notification, that the undertakings of the Company, and 
the right, title and interest of the Company in relation to its undertakings which have vested in the Central 
Government under section 3, shall, instead of continuing to vest in the Central Government, vest in that 
existing Government company either on the date of publication of the notification or on such earlier or 
later date (not being a date earlier than the appointed day) as may be specified in the notification. 

(2)  Where  the  right,  title  and  interest  of  the  Company  in  relation  to  its  undertakings  vest,  under       

sub-section (1), in an existing Government company, that Government company shall, on and from the 
date of such vesting be deemed to have become, and until the transfer of the undertakings by virtue of the 
provisions of section 6, to a new Government company, be deemed to be, the owner in relation to such 
undertakings  and  the  rights  and  liabilities  of  the  Central  Government  in  relation  to  such  undertakings 
shall, on and from the date of such vesting, be deemed to have become, and until the date of such transfer, 
be deemed to be, the rights and liabilities, respectively, of that existing Government company. 

6. Transfer of undertakings of the Company from an existing Government company to a new 
Government  company.—(1)  Notwithstanding  anything  contained  in  sections  3  and  4,  where  the 
undertakings of the Company have been directed, under sub-section (1) of section 5, to vest in an existing 
Government company, the Central Government may, if it is satisfied that a new Government company is 
willing to comply, or has complied, with such terms and conditions as that Government may think fit to 
impose,  declare,  by  notification,  that  the  undertakings  of  the  Company  be  transferred  to  that  new 
Government company; and on the issue of such declaration, the right, title and interest of the Company in 
relation  to  its  undertakings,  which  had  been  directed  under  sub-section  (1)  of  section  5  to  vest  in  an 
existing Government company, shall, instead of continuing to vest in that existing Government company, 
vest in that new Government company with effect from the date on which such declaration is made. 

(2)  Where  the  right,  title  and  interest  of  the  existing  Government  company  in  relation  to  the 
undertakings  of  the  Company  vest  under  sub-section  (1)  in  a  new  Government  company,  that  new 
Government company shall, on and from the date of such vesting, be deemed to have become the owner 
in  relation  to  such  undertakings  and  the  rights  and  liabilities  of  the  existing  Government  company  in 
relation to such undertakings shall, on and from the date of such vesting, be deemed to have become the 
rights and liabilities, respectively, of that new Government company. 

7. Company to be liable for certain prior liabilities.—(1) Every liability of the Company in respect 
of any period prior to the appointed day, shall be the liability of the Company and shall be enforceable 
against it, and not against the Central Government, or where the undertakings of the Company vest in an 
existing, or a new, Government company, against such Government company. 

(2) For the removal of doubts, it is hereby declared that— 

(a) save as otherwise expressly provided in this Act, no liability of the Company in relation to its 
undertakings,  in  respect  of  any  period  prior  to  the  appointed  day,  shall  be  enforceable  against  the 
Central  Government,  or  where  the  undertakings  of  the  Company  vest  in  an  existing,  or  a  new, 
Government company, against such Government company; 

(b)  no  award,  decree  or  order  of  any  court,  tribunal  or  other  authority  in  relation  to  the 
undertakings  of  the  Company,  passed  after  the  appointed  day  in  respect  of  any  matter,  claim  or 
dispute, which arose before that day, shall be enforceable against the Central Government, or where 
the undertakings of the Company vest in an existing, or a new, Government company, against such 
Government company; 

(c) no liability incurred by the Company before the appointed day for the contravention of any 
provision of law for the time being in force shall be enforceable against the Central Government, or 
where the undertakings of the Company vest in an existing, or a new, Government company, against 
such Government company. 

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CHAPTER III 

PAYMENT OF AMOUNTS 

8.  Payment  of  amount.—(1)  For  the  transfer  to,  and  vesting  in,  the  Central  Government,  under 
section 3, of the undertakings of the Company, and the right, title and interest of the Company in relation 
to such undertakings, there shall be given by the Central Government to the Company in cash and in the 
manner specified in Chapter VI, an amount of rupees ten crores and four lakhs. 

(2) For the removal of doubts, it is hereby declared that the liabilities of the Company, in relation to 
its undertakings, shall be met, in accordance with the rights and interests of the creditors of the Company, 
from the amount due to the Company under sub-section (1). 

9. Payment of further amount.—(1) For the deprivation of the Company of the management of the 
undertakings owned by it, there shall be given, by the Central Government, to the Company, in addition 
to the amount specified in section 8, an amount computed at the rate of ten thousand rupees per annum for 
the period commencing on the date on which the management of the undertakings of the Company was 
taken  over  in  pursuance  of  the  order  made  by  the  Central  Government  under  section  18AA  of  the 
Industries (Development and Regulation) Act, 1951 (65 of 1951), and ending on the appointed day. 

(2) The amount specified in section 8, and the amount computed in accordance with the provisions of 
sub-section  (1),  shall  carry  simple  interest  at  the  rate  of  four  per  cent.  per  annum  for  the  period 
commencing on the appointed day and ending on the date on which payment of such amount is made by 
the Central Government to the Commissioner. 

(3) The  amounts  determined  in  accordance  with  the provisions  of  sub-sections  (1)  and  (2)  shall  be 

given to the Company in addition to the amount specified in section 8. 

CHAPTER IV 

MANAGEMENT, ETC., OF THE UNDERTAKINGS OF THE COMPANY 

10.  Management,  etc.,  of  the  undertakings  of  the  Company.—(1)  The  general  superintendence, 
direction,  control  and  management  of  the  affairs  and  business  of  the  undertakings  owned  by  the 
Company, the right, title and interest in relation to which have vested in the Central Government under 
section 3, shall,— 

(a)  where  a  direction  has  been  made  by  the  Central  Government  under  sub-section  (1)  of              

section 5, vest, on and from the date, specified in such direction, in the existing Government company 
specified therein; or 

(b) where a declaration has been made under sub-section (1) of section 6, vest, on and from the 

date of such declaration, in the new Government company specified therein; or 

(c) where no direction referred to in clause (a) or declaration referred to in clause (b) has been 
made,  vest,  on  and  from  the  appointed  day,  in  one  or  more  Custodians  appointed  by  the  Central 
Government under sub-section (2), 

and thereupon the existing, or new, Government company or the Custodian or Custodians so appointed, 
as the case may be, shall be entitled to exercise, to the exclusion of all other persons, all such powers and 
do all such things as the Company is authorised to exercise and do in relation to the undertakings owned 
by it. 

(2) The Central Government may appoint one or more individuals or a Government company as the 
Custodian or Custodians of the undertakings of the Company in relation to which no direction has been 
made by it under sub-section (1) of section 5 or no declaration has been made by it under sub-section (1) 
of  section  6,  and  the  Custodian  or  Custodians  so  appointed  shall  receive,  from  the  funds  of  the 
undertakings, such remuneration as may be specified by the Central Government. 

(3) The Custodian or Custodians of the undertakings of the Company shall maintain an account of the 
undertakings of the Company in such form and manner and under such conditions as may be prescribed, 
and the provisions of the Companies Act, 1956 (1 of 1956), shall apply to the audit of the accounts so 
maintained as they apply to the audit of the accounts of a company. 

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11. Duty of persons in charge of management of the undertakings of the Company to deliver all 
assets, etc.—(1) On the vesting of the management of the undertakings of the Company in an existing, or 
a new, Government company or on the appointment of a Custodian or Custodians, all persons in charge of 
the  management  of  the  undertakings  of  the  Company  immediately  before  such  vesting  or  appointment 
shall be bound to deliver to such Government company, or the Custodian or Custodians, as the case may 
be, all assets, books of account, registers and other documents in their custody relating to the undertakings 
of the Company. 

(2) The Central Government may issue such directions as it may deem desirable in the circumstances 
of  the  case  to  the  existing,  or  new,  Government  company  or  the  Custodian  or  Custodians,  and  such 
Government company, Custodian or Custodians may also, if it is considered necessary so to do, apply to 
the  Central  Government  at  any  time  for  instructions as  to  the  manner  in  which  the  management  of  the 
undertakings of the Company shall be conducted or in relation to any other matter arising in the course of 
such management. 

12. Duty of persons to account for assets, etc., in their possession.—(1) Any person who has, on 
the appointed day, in his possession or under his control, any assets, books, documents or other papers 
relating to any undertaking owned by the Company, which has vested in the Central Government or in an 
existing, or a new, Government company under this Act, and which belongs to the Company, or would 
have so belonged, if the undertakings owned by the Company had not vested in the Central Government 
or such Government company, shall be liable to account for the said assets, books, documents and other 
papers to the Central Government or the Government company and shall deliver them up to the Central 
Government  or  such  Government  company  or  to  such  person  or  body  of  persons  as  the  Central 
Government or the Government company may specify in this behalf. 

(2) The Central Government may take or cause to be taken all necessary steps for securing possession 

of the undertakings of the Company which have vested in it under section 3. 

(3)  The  Company  shall,  within  such  period  as  the  Central  Government  may  allow  in  this  behalf, 
furnish to that Government a complete inventory of all its property and assets, as on the  appointed day, 
pertaining to the undertakings which have vested in the Central Government under section 3, and, for this 
purpose,  the  Central  Government  or  the  existing,  or  new,  Government  company  shall  afford  to  the 
Company all reasonable facilities. 

CHAPTER V 

PROVISIONS RELATING TO THE EMPLOYEES OF THE COMPANY 

13.  Continuance  of  employees.—(1)  Every  employee  of  the  Company  in  connection  with  any 
undertaking  owned  by  it,  shall  become,  on  and  from  the  appointed  day,  an  employee  of  the  Central 
Government, and where such undertaking is vested in an existing, or a new, Government company under 
this  Act,  become,  on  and  from  the  date  of  such  vesting  in  such  Government  company,  an  employee 
thereof  and  shall  hold  office  or  service  under  the  Central  Government  or  the  existing,  of  new, 
Government company, as the case may be, with the same rights and privileges as to pension, gratuity and 
other matters as would have been admissible to him if there had been no such vesting and shall continue 
to  do  so  unless  and  until  his  employment  under  the  Central  Government  or  the  existing,  or  new, 
Government  company,  as  the  case  may  be,  is  duly  terminated  or  until  his  remuneration  and  other 
conditions  of  service  are  duly  altered  by  the  Central  Government  or  the  existing,  or  new,  Government 
company, as the case may be. 

(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any 
other law for the lime being in force, the transfer of the services of any officer or other person employed 
in  any  undertakings  owned  by  the  Company  to  the  Central  Government  or  the  existing,  or  new, 
Government company shall not entitle such officer or other employee to any compensation under this Act 
or any other law for the time being in force and no such claim shall be entertained by any court, tribunal 
or other authority. 

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14.  Provident  fund  and  other  funds.—(1)  Where  the  Company  has  established  a  provident  fund, 
superannuation  fund,  welfare  fund  or  other  fund  for  the  benefit  of  persons  employed  in  any  of  the 
undertakings owned by it, the monies relatable to the employees, whose services have become transferred 
by or under this Act to the Central Government or an existing, or a new, Government company shall, out 
of the monies standing, on the appointed day, to the credit of such provident fund, superannuation fund, 
welfare  fund  or  other  fund,  stand  transferred  to,  and  shall  vest  in,  the  Central  Government  or  the 
Government company, as the case may be. 

(2)  The  monies  which  stand  transferred  under  sub-section  (1)  to  the  Central  Government  or  the 
existing, or new, Government company, as the case may be, shall be dealt with by that Government or the 
Government company in such manner as may be prescribed. 
CHAPTER VI 
COMMISSIONER OF PAYMENTS 

15.  Appointment  of  Commissioner  of  Payments.—(1)  The  Central  Government  shall,  for  the 
purpose  of  disbursing  the  amounts  payable  under  sections  8  and  9  to  the  Company,  by  notification, 
appoint a Commissioner of Payments. 

(2)  The  Central  Government  may  appoint  such  other  persons  as  it  may  think  fit  to  assist  the 
Commissioner  and  thereupon  the  Commissioner  may  authorise  one  or  more  of  such  persons  also  to 
exercise  all  or  any  of  the  powers  exercisable  by  him  under  this  Act  and  different  persons  may  be 
authorised to exercise different powers. 

(3)  Any  person  authorised  by  the  Commissioner  to  exercise  any  of  the  powers  exercisable  by  the 
Commissioner may exercise those powers in the same manner and with the same effect as if they have 
been conferred on that person directly by this Act and not by way of authorisation. 

(4) The salaries and allowances of the Commissioner and other persons appointed under this section 

shall be defrayed out of the Consolidated Fund of India. 

16.  Payment  by  the  Central  Government  to  the  Commissioner.—(1)  The  Central  Government 
shall, within thirty days from the specified date, pay, in cash, to the Commissioner, for payment to the 
Company— 

(a) an amount equal to that specified in section 8; 

(b) a further amount equal to the amount payable to the Company under section 9. 

(2) A deposit account shall be opened by the Central Government in favour of the Commissioner, in 
the  Public  Account  of  India,  and  every  amount  paid  under  this  Act  to  the  Commissioner  shall  be 
deposited by him to the credit of the said deposit account and the said deposit account shall be operated 
by the Commissioner. 

(3) Records shall be maintained by the Commissioner in respect of the undertakings of the Company 

in relation to which payment has been made to him under this Act. 

(4)  Interest  accruing  on  the  amounts  standing  to  the  credit  of  the  deposit  account  referred  to  in                

sub-section (2) shall ensure to the benefit of the Company. 

17.  Certain  powers  of  the  Central  Government  or  Government  company.—(1)  The  Central 
Government  or  the  existing,  or  new,  Government  company,  as  the  case  may  be,  shall  be  entitled  to 
receive up to the specified date, to the exclusion of all other persons, any money due to the Company, in 
relation  to  any  of  the  undertakings  owned  by  it  which  have  vested  in  the  Central  Government  or  such 
Government company, and realised after the appointed day, notwithstanding that the realisation pertains 
to a period prior to the appointed day. 

(2) The Central Government or the existing, or new, Government company, as the case may be, may 
make  a  claim  to  the  Commissioner  with  regard  to  every  payment  made  by  that  Government  or 
Government company, after the appointed day, for discharging any liability of the Company in respect of 
any of the undertakings owned by it, in relation to any period prior to the appointed day; and every such 
claim  shall  have  priority  in  accordance  with  the  priorities  attaching  under  this  Act,  to  the  matter  in 
relation  to  which  such  liability  has  been  discharged  by  the  Central  Government  or  the  Government 
company. 

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(3)  Save  as  otherwise  provided  in  this  Act,  the  liabilities  of  the  Company  in  relation  to  any  of  the 
undertakings owned by it, in respect of any transaction prior to the appointed day, which have not been 
discharged on or before the specified date, shall be the liabilities of the Company. 

18. Claims to be made to the Commissioner.—Every person having a claim against the Company 
with regard to any of  the matters specified in the Schedule, pertaining to any undertaking owned by it, 
shall prefer such claim before the Commissioner within thirty days from the specified date: 

Provided  that  if  the  Commissioner  is  satisfied  that  the  claimant  was  prevented  by  sufficient  cause 
from preferring the claim within the said period of thirty days, he may entertain the claim within a further 
period of thirty days, but not thereafter. 

19. Priority of claims.—The claims made under section 18 shall have priorities in accordance with 

the following principles, namely:— 

(a)  Category  I  shall  have  precedence  over  all  other  categories  and  Category  II  shall  have 

precedence over Category III and so on; 

(b) the claims specified in each of the categories shall rank equally and be paid in full, but, if the 
amount is insufficient to meet such claims in full, they shall abate in equal proportions and be paid 
accordingly; and 

(c) the question of discharging any liability with regard to a matter specified in a lower category 
shall arise only if a surplus is left after meeting all the liabilities specified in the immediately higher 
category. 

20. Examination of claims.—(1) On receipt of the claims made under section 18, the Commissioner 
shall  arrange  the  claims  in  the  order  of  priorities  specified  in  the  Schedule  and  examine  the  same  in 
accordance with such order. 

(2)  If,  on  examination  of  the  claims,  the  Commissioner  is  of  opinion  that  the  amount  paid  to  him 
under  this  Act  is  not  sufficient  to  meet  the  liabilities  specified  in  any  lower  category,  he  shall  not  be 
required to examine any claim in respect of such lower category. 

21.  Admission  or  rejection  of  claims.—(1)  After  examining  the  claims  with  reference  to  the 
priorities set out in the Schedule, the Commissioner shall fix a date on or before which every claimant 
shall file the proof of his claim. 

(2)  Not less  than  fourteen days’  notice  of  the  date  so  fixed shall  be  given  by  advertisement  in  one 
issue of any daily newspaper in the English language having circulation in the major part of the country 
and  one  issue  of  any  daily  newspaper  in  such  regional  language  as  the  Commissioner  may  consider 
suitable,  and  every  such  notice  shall  call  upon  the  claimant  to  file  the  proof  of  his  claim  with  the 
Commissioner within the period specified in the advertisement. 

(3)  Every  claimant  who  fails  to  file  the  proof  of  his  claim  within  the  period  specified  by  the 

Commissioner shall be excluded from the disbursement made by the Commissioner. 

(4) The Commissioner shall, after such investigation as may, in his opinion, be necessary and after 
giving  the  Company  an  opportunity  of  refuting  the  claim  and  after  giving  the  claimant  a  reasonable 
opportunity of being heard, by order in writing, admit or reject the claim in whole or in part. 

(5) The Commissioner shall have the power to regulate his own procedure in all matters arising out of 
the discharge of his functions, including the place or places at which he may hold his sitting and shall, for 
the  purpose  of  making  any  investigation  under  this  Act,  have  the  same  powers  as  are  vested  in  a  civil 
court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following 
matters, namely:— 

(a) the summoning and enforcing the attendance of any witness and examining him on oath; 
(b)  the  discovery  and  production  of  any  document  or  other  material  object  producible  as 

evidence; 

(c) the reception of evidence on affidavits; 
(d) the issuing of any commission for the examination of witnesses. 

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(6) Any investigation before the Commissioner shall be deemed to be a judicial proceeding within the 
meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860) and the Commissioner shall be 
deemed to be a civil court for the purposes of section 195 and Chapter XXVI  of the Code of Criminal 
Procedure, 1973 (2 of 1974). 

(7)  A  claimant  who  is  dissatisfied  with  the  decision  of  the  Commissioner  may  prefer  an  appeal 
against such decision to the High Court within the local limits of whose jurisdiction the registered office 
of the Company is situated: 

Provided that where a person who is a Judge of a High Court is appointed to be the Commissioner, 

such appeal shall be heard and disposed of by not less than two Judges of that High Court. 

22.  Disbursement  of  money  by  the  Commissioner.—After  admitting  a  claim  under  this  Act,  the 
amount due in respect of such claim shall be paid by the Commissioner to the person or persons to whom 
such amount is due and on such payment, the liability of the Company in respect of any claim relating to 
the undertakings owned by it shall stand discharged. 

23. Disbursement of amounts to the Company.—(1) If out of the monies paid to him in relation to 
any undertaking owned by the Company there is a balance left after meeting the liabilities as specified in 
the Schedule, the Commissioner shall disburse such balance to the Company. 

(2)  Where  the  possession  of  any  machinery,  equipment  or  other  property  has  vested  in  the  Central 
Government  or  any  existing,  or  new,  Government  company  under  this  Act,  but  such  machinery, 
equipment  or  other  property  does  not  belong  to  the  Company,  it  shall  be  lawful  for  the  Central 
Government or, as the case may be, the existing, or new, Government company, to continue to possess 
such machinery or equipment or other property on the same terms and conditions under which they were 
possessed by the Company, immediately before the appointed day. 

24. Undisbursed or unclaimed amount to be deposited with the general revenue account.—Any 
money  paid  to  the  Commissioner  which  remains  undisbursed  or  unclaimed  on  the  date  immediately 
preceding the date on which the office of the Commissioner is finally would up, shall be transferred by 
the  Commissioner,  before his  office  is  finally  wound  up,  to  the  general  revenue  account of the  Central 
Government; but a claim to any money so transferred may be preferred to the Central Government by the 
person  entitled to  such  payment  and  shall  be dealt  with  as  if  such transfer  had not  been  made,  and  the 
order, if any, for payment of the claim being treated as an order for the refund of revenue. 

CHAPTER VII 

MISCELLANEOUS 

25.  Act  to  have  overriding  effect.—The  provisions  of  this  Act  shall  have  effect  notwithstanding 
anything inconsistent therewith contained in any other law for the time being in force or in any instrument 
having effect by virtue of any law, other than this Act, or in any decree or order of any court, tribunal or 
other authority. 

26.  Assumption  of  liability.—(1)  Where  any  liability  of  the  Company  arising  out  of  any  item 
specified in any category in Part I of the Schedule is not discharged fully by the Commissioner out of the 
amounts  paid  to  him  under  this  Act,  the  Commissioner  shall  intimate  in  writing  to  the  Central 
Government the extent of the liability which remains undischarged and that liability shall be assumed by 
the Central Government. 

(2)  The  Central  Government  may,  by  order,  direct  the  existing,  or  new,  Government  company  in 
which the undertakings of the Company become vested by virtue of any direction made under sub-section 
(1) of section 5 or declaration made under sub-section (1) of section 6, to take over the liability assumed 
by the Central Government under sub-section (1), and on receipt of such direction, it shall be the duty of 
such existing, or new, Government company to discharge such liability. 

10 

27. Management to continue to vest in the Custodian until alternative arrangements have been 
made.—Notwithstanding the vesting under this Act of the undertakings of the Company in the Central 
Government or an existing, or a new, Government company,— 

(a)  the  Custodian  who  has  been  managing  the  affairs  of  such  undertaking  before  the  date  on 
which  the  undertaking  had  so  vested  shall,  until  alternative  arrangements  have  been  made  by  the 
Central Government or, as the case may be, such Government company, for the management of such 
undertakings  continue  to  manage  the  affairs  of  the  undertakings,  as  if  the  Custodian  had  been 
authorised by the Central Government or, as the case may be, such Government company, to manage 
such undertakings; 

(b)  the  Custodian  or  any  person  authorised  by  him  for  this  purpose  shall,  until  alternative 
arrangements have been made by the Central Government or, as the case may be, such Government 
company, continue to be authorised to operate, in relation to the undertakings of the Company, any 
account  of  such  undertakings  in  any  bank  as  if  the  Custodian  or  the  person  authorised  by  him  had 
been authorised by the Central Government or such Government company to operate such account. 

28.  Contracts  to  cease  to  have  effect  unless  ratified  by  the  Central  Government  or  the 
Government  company.—Every  contract  entered  into  by  the  Company  in  relation  to  any  of  the 
undertakings owned by it, which has vested in the Central Government under section 3, for any service, 
sale  or  supply  and  in  force  immediately  before  the  appointed  day,  shall,  on  and  from  the  expiry  of  a 
period of one hundred and eighty days from the appointed day, cease to have effect unless such contract 
is,  before  the  expiry  of  that  period,  ratified,  in  writing,  by  the  Central  Government,  or  the  existing,  or 
new, Government company, in which such undertakings have been vested under this Act, and in ratifying 
such  contract  the  Central  Government  or  such  Government  company  may  make  such  alteration  or 
modification therein as it may think fit: 

Provided  that  the  Central  Government  or  such  Government  company  shall  not  omit  to  ratify  a 

contract and shall not make any alteration or modification in a contract— 

(a) unless it is satisfied that such contract is unduly onerous or has been entered into in bad faith 

or is detrimental to the interests of the Central Government or such Government company; and 

(b)  except  after  giving  the  parties  to  the  contract  a  reasonable  opportunity  of  being  heard  and 
except  after  recording  in  writing  its  reasons  for  refusal  to  ratify  the  contract  or  for  making  any 
alteration or modification therein. 

29. Penalties.—Any person who,— 

(a)  having  in  his  possession,  custody  or  control  any  property  forming  part  of  the  undertakings 
owned  by  the  Company,  wrongfully  withholds  such  property  from  the  Central  Government  or  the 
Government company; or 

(b) wrongfully obtains possession of, or retains, any  property forming part of, the undertakings 

owned by the Company; or 

(c)  wilfully  withholds  or  fails  to  furnish  to  the  Central  Government  or  the  existing,  or  new, 
Government  company  or  any  person  or  body  of  persons  specified  by  that  Government  or  such 
Government company, as the case may be, any document relating to the undertakings owned by the 
Company, which may be in his possession, custody or control; or 

(d) fails to deliver to the Central  Government or the existing, or new, Government company or 
any  person  or  body  of  persons  specified  by  that  Government  or  Government  company,  any  assets, 
books  of  account,  registers  or  other  documents  in  his  possession,  custody  or  control  relating  to  the 
undertakings owned by the Company; or 

(e) wrongfully removes or destroys any property forming part of the undertakings owned by the 
Company or prefers any claim under this Act which he knows or has reason to believe to be false or 
grossly inaccurate, 

shall be punishable with imprisonment for a term which may extend to two years and also with fine which 
may extend to ten thousand rupees. 

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30.  Offences  by  Companies.—(1)  Where  an  offence  under  this  Act  has  been  committed  by  a 
company,  every  person  who,  at  the  time  the  offence  was  committed,  was  in  charge  of,  and  was 
responsible to, the company for the conduct of the business of the company, as well as the company, shall 
be  deemed  to  be  guilty  of  the  offence  and  shall  be  liable  to  be  proceeded  against  and  punished 
accordingly: 

Provided  that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment, if he proves that the offence was committed without his knowledge or that he had exercised 
all due diligence to prevent the commission of such offence. 

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been 
committed  by  a  company  and  it  is  proved  that  the  offence  has  been  committed  with  the  consent  or 
connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other 
officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of 
that offence and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section— 

(a)  “company”  means  any  body  corporate  and  includes  a  firm  or  other  association  of              

individuals; and 

(b) “director”, in relation to a firm, means a partner in the firm. 

31.  Protection  of  action  taken  in  good  faith.—(1)  No  suit,  prosecution  or  other  legal  proceeding 
shall  lie  against  the  Central  Government  or  any  officer  of  that  Government  or  the  existing,  or  new, 
Government  company  in  which  the  undertakings  of  the  Company  have  vested  under  this  Act  or  other 
person authorised by that Government or Government company for anything which is in good faith done 
or intended to be done under this Act. 

(2) No suit or other legal proceeding shall lie against the Central Government or any of its officers or 
other employees or the existing, or new, Government company aforesaid or any officer or other person 
authorised by that Company for any damage caused or likely to be caused by anything which is in good 
faith done or intended to be done under this Act. 

32. Delegation of powers.—(1) The Central Government may, by notification, direct that all or any 
of  the  powers  exercisable  by  it  under  this  Act,  other  than  the  powers  conferred  by  this  section  and 
sections  33  and  34,  may  also  be  exercised  by  such  person  or  persons  as  may  be  specified  in  the 
notification. 

(2) Whenever any delegation of power is made under sub-section (1), the person to whom such power 

has been delegated shall act under the direction, control and supervision of the Central Government. 

33.  Power  to  make  rules.—(1)  The  Central  Government  may,  by  notification,  makes  rules  for 

carrying out the provisions of this Act. 

(2)  In  particular,  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for all or any of the following matters, namely:— 

(a) the time within which, and the manner in which, an intimation referred to in sub-section (3) of 

section 4 shall be given; 

(b) the form and manner in which and the conditions under which accounts shall be maintained 

by the Custodian or Custodians, as required by sub-section (3) of section 10; 

(c)  the  manner  in  which  the  monies  in  any  provident  fund  or  other  fund,  referred  to  in               

sub-section (2) of section 14, shall be dealt with; 

(d) any other matter which is required to be, or may be, prescribed. 

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(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it 
is made, before each House of Parliament, while it is in session, for a total period of thirty days which 
may be comprised in one session or in two or more successive sessions, and if, before the expiry of the 
session  immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
making any modification in the rule or both Houses agree that the rule should not be made, the rule shall 
thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that 
any such modification or annulment shall be without prejudice to the validity of anything previously done 
under that rule. 

34. Power to remove difficulties.—If any difficulty arises in giving effect to the provisions of this 
Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the 
difficulty: 

Provided that no such order shall be made after the expiry of a period of two years from the appointed 

day. 

35.  Repeal  and  saving.—(1)  The  National  Company  Limited  (Acquisition  and  Transfer  of 

Undertakings) Ordinance, 1980 (4 of 1980), is hereby repealed. 

(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed 

shall be deemed to have been done or taken under the corresponding provisions of this Act. 

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THE SCHEDULE 

(See sections 18, 20, 21, 23 and 26) 

ORDER OF PRIORITIES 

Part I 

Category I— 

Employees’ dues on account of unpaid salaries, wages, provident fund, Employees’ State Insurance 
contribution  or  premium  relating  to  Life  Insurance  Corporation  of  India  and  any  other  amounts  due  to 
employees,  in  respect  of  any  period  whether  before  or  after  the  management  of  the  undertaking  of  the 
Company had been taken over by the Central Government. 

Category II— 

Secured  loans  obtained  by  the  Company  from  nationalised  banks  and  public  financial  institutions 
during any period whether before or after the management of the undertaking of the Company had been 
taken over by the Central Government. 

Category III— 

Amounts due to trade and other creditors in relation to any transaction which took place during the              

post-take-over management period. 

Category IV— 

Part II 

Revenue, taxes, cesses, rules or other dues to the Central Government, State Governments and local 

authorities or State Electricity Board for the pre-take-over management period. 

Category V— 

Amounts due to trade and other creditors in relation to any transaction which took place during the 

pre-take-over management period. 

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